Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Economist’

How Keynes would negotiate Brexit

Posted by hkarner - 16. August 2018

Date: 15-08-2018
Source: The Economist

The great economist would strive to understand the other side and focus only on the future

WOULD John Maynard Keynes be a Brexiteer or a Remoaner? The great 20th-century economist started out as a free-trader. But he argued against “economic entanglement among nations” in an essay titled “National Self-Sufficiency” in 1933. Goods should be “homespun” wherever possible, he wrote, and “above all, let finance be primarily national.”  By 1945 Keynes was an internationalist again.

If nothing else, Lord Keynes was a pragmatist (“When the facts change, I change my mind. What do you do?,” he apocryphally said.)  What is certain is that he would be at the negotiating table.

How Keynes would handle Brussels today is clear from a speech to the House of Lords in December 1945 on Britain’s post-war financial dealings with America. In it, he sets out what it means to get the best deal possible, even in unfavourable circumstances. Den Rest des Beitrags lesen »

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“Never Trump” Republicans could have their revenge

Posted by hkarner - 13. August 2018

Date: 11-08-2018
Source: The Economist: Lexington

 The president will not lose a primary, but he could be fatally damaged

THE phrase “forlorn hope” entered English from Dutch and German in the 17th century. It referred to a suicide mission or, more often, the ambitious and condemned men chosen to execute it. The most celebrated British forlorn hope was a band of aristocrats and ne’er-do-wells sent to scale the walls of the Spanish city of Badajoz in 1812. They carried sacks of hay to cushion their leap into its defensive ditch. Many were blown up by French mines the moment they landed.

Never Trumpers, as President Donald Trump’s Republican critics are known, are the forlorn hope of American politics. Led by conservative pundits such as Max Boot, David Brooks, Bill Kristol, David Frum and George Will, they are few in number, gallantly in favour of things like free trade and fiscal discipline that Republicans used to care about, and probably doomed. Mr Trump’s hold over Republicans seems unbreakable. Almost 90% approve of his performance. “There is no Republican Party, there’s a Trump party,” says John Boehner, a former Republican congressional leader. Den Rest des Beitrags lesen »

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What the far left and right have in common, in Germany and elsewhere

Posted by hkarner - 11. August 2018

Date: 09-08-2018
Source: The Economist

Parties that combine economic statism and cultural conservatism are growing

SITTING down with The Economist in her office in Berlin, Sahra Wagenknecht is restless: “Do we think that anyone can just migrate to Germany and have a claim to social welfare?” asks the doyenne of the Left (Die Linke), a socialist party. “Or do we say that labour migration is more of a problem?” The party’s leader in the Bundestag worries about its direction. “If you concentrate more on hip, urban sorts of voters—on identity and lifestyle debates—you don’t speak to the poorest in society. They no longer feel properly represented.” Her answer, launched on August 4th, is a new, non-party movement called “Rise Up” designed to reach those who have switched off from politics. It may point to a significant realignment in both German and European politics.

The Left was formed in 2005 when leftists who had quit the Social Democrats (SPD) merged with the successor party to the former East German communists. It has always been an uneasy alliance of provincial socialists and urban left-libertarians. At last year’s election it lost some 420,000 voters, principally older ones in the former communist east, to the right-wing Alternative for Germany (AfD) party, but offset that loss by gaining 700,000 from the SPD and 330,000 from the Greens, mainly in western cities and university towns. It now faces a choice: consolidate its new strength as a lefty alternative to the Greens (as Katja Kipping, the Left’s leader, wants to do) or prioritise winning back traditional working-class voters as a lefty alternative to the AfD? Den Rest des Beitrags lesen »

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Why oil firms should worry more about climate change

Posted by hkarner - 11. August 2018

Date: 09-08-2018
Source: The Economist
Subject: Too much in the tank

Many are using an overly high oil price and possibly overvaluing assets

THE oil industry has much to fear from the Paris climate deal of 2015, which aims to limit temperature rises to less than 2°C above the pre-industrial era. To curb carbon emissions, demand for fossil fuels will have to drop in coming decades. That is likely to push down oil prices and the value of investments that firms have made based upon them.

A report published on August 6th by Sarasin & Partners, an asset manager in London, suggests that oil firms are assuming that decarbonisation will be limited and are thus overstating their assets. Sarasin notes that eight European oil giants all used long-term oil price assumptions of $70-80 a barrel, rising by 2% a year with inflation to $127-145 by 2050, to price their assets. But that does not appear to assume any drop in demand. The International Energy Agency predicts a price of just $60 by 2060; Oil Change International, an activist think-tank, estimates one as low as $35 (see chart). Oil firms could face a sticky mess of forced writedowns.

The picture is complicated by the fact that in Europe oil firms can choose their own long-term prices, whereas in America regulators compel firms based there to use the average price over the past year, which is nearing $70. Executives in both places have their reasons for thinking that prices will be higher than the worst forecasts, particularly as the world is set to miss the Paris goals. Den Rest des Beitrags lesen »

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What would happen if Britain left the EU with no deal?

Posted by hkarner - 7. August 2018

Date: 06-08-2018
Source: The Economist

Food shortages, grounded planes and a hard border with Ireland are all possibilities

BREXIT is due to happen on March 29th 2019, two years after Theresa May invoked Article 50, the withdrawal provision of the EU treaty. Britain and the European Union are working towards a withdrawal treaty and a framework agreement for future trade. But the gap between the two sides is large. And there is a possibility that, even if a deal were agreed, the British Parliament might reject it. Yet Article 50 provides that withdrawal will happen automatically unless there is unanimous agreement to extend the timetable. So Britain could leave next March with no deal at all: a cliff-edge Brexit. What would that mean?

Hardline Brexiteers are happy with this idea. They say Britain would do fine trading with the EU on World Trade Organisation (WTO) terms, like most third countries. And they would be pleased to junk all EU laws and regulations in what some call a clean Brexit. Yet because there has been only limited preparation for a no-deal Brexit, it is likely to be disorderly. EU and WTO rules would require customs inspections and tariffs on much bilateral trade, which would cause long queues at Dover and disrupt just-in-time supply chains, as well as imposing a hard border in Ireland. Britain would fall out of EU regulatory bodies for things like air safety, medicines, nuclear materials, food and car inspection, and would not have time to create new regulators of its own. That means aircraft might not be allowed to fly and radio isotopes for cancer treatments might not be imported, while both food imports and car exports could be interrupted. Den Rest des Beitrags lesen »

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Anti-immigration, like pro-immigration, is a legitimate political position

Posted by hkarner - 7. August 2018

Date: 06-08-2018
Source: The Economist by Yuval Noah Harari

A book excerpt from “21 Lessons for the 21st Century” by Yuval Noah Harari

An historian by training, Yuval Noah Harari rose to prominence with two best-selling books. Sapiens looked at humanity’s past and Homo Deus at its future. His latest book, 21 Lessons for the 21st Century, considers the here-and-now, spanning subjects from technology and terrorism to populism and religion.

In the excerpt that follows, he considers the underlying premise of immigration and what migrants and societies might “owe” each other, to conclude: “It would be wrong to tar all anti-immigrationists as ‘fascists’, just as it would be wrong to depict all pro-immigrationists as committed to ‘cultural suicide’. […] It is a discussion between two legitimate political positions, which should be decided through standard democratic procedures.”

*      *     *

The European discussion about immigration often degenerates into a shouting match in which neither side hears the other. To clarify matters, it would perhaps be helpful to view immigration as a deal with three basic conditions or terms:

Term 1: The host country allows the immigrants in.

Term 2: In return, the immigrants must embrace at least the core norms and values of the host country, even if that means giving up some of their traditional norms and values.

Term 3: If the immigrants assimilate to a sufficient degree, over time they become equal and full members of the host country. ‘They’ become ‘us’.

These three terms give rise to three distinct debates about the exact meaning of each term: Den Rest des Beitrags lesen »

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Countries team up to save the liberal order from Donald Trump

Posted by hkarner - 4. August 2018

Date: 02-08-2018
Source: The Economist

As America retreats from global leadership, coalitions of the like-minded try to limit the damage

FOR the past four years senior officials from a group of leading democracies, calling themselves the “D10”, have quietly been meeting once or twice a year to discuss how to co-ordinate strategies to advance the liberal world order. Foreign ministry policy-planners and a few think-tank types would discuss responses to Russia, China, North Korea, Iran—but largely below the radar, so as not to be seen as a cabal of the “old West”. The idea has been to enhance co-operation among “a small number of strategically like-minded and highly capable states”, as Ash Jain, a former member of the State Department’s policy-planning staff, put it in a working paper in 2013.

But, at their next meeting, in Seoul in September, the D10 (America, Britain, France, Germany, Italy, Canada, Japan, Australia and South Korea, plus the European Union) will have a new agenda item: America’s global role. Whereas the main threat to the rules-based order used to come from outside the leading democracies, some now fear it comes from within. Den Rest des Beitrags lesen »

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Move over FAANG, here comes MAGA

Posted by hkarner - 4. August 2018

Date: 02-08-2018
Source: The Economist

The tech giants are still in rude health

Throwing all big tech companies into one basket has always been lazy

IN THE end, it wasn’t enough, at least for now. On July 31st Apple announced results for its third quarter that handily beat analysts’ expectations. Revenues rose by 17% compared with the same period in 2017, and profits were 32% higher. The firm’s shares jumped by nearly 4% in after-hours trading. But Apple did not quite manage to become the world’s first widely held listed company with a market capitalisation of $1trn (see chart).

The near miss is a fitting coda to the latest round of results in techland.

Momentum in this most upwardly mobile of industries is unbroken; sales and profits are still rising. But the laws of economic gravity have not been repealed. In fact, the era of the FAANGs— as Facebook, Amazon, Apple, Netflix and Google’s parent, Alphabet, are collectively known—may be coming to an end, giving way to a period in which two groups of tech firms follow different trajectories.

This year the FAANGs and a few other high-flying tech firms provided more than half the returns in the S&P 500 share index. Netflix’s share price, for instance, more than doubled between January and July. Twitter’s almost did so. Facebook’s market value quickly recovered from a low in March, after revelations that its data on 87m users had leaked to a British political-campaign firm.

With their shares priced for near-perfect results, the firms were vulnerable to bad news. This duly arrived, starting with Netflix, a video-streaming service, which said in mid-July that it had added fewer subscribers than expected. A few days later Facebook gave downbeat guidance about future growth and margins. Then Twitter, a microblogging site, announced that its number of active users had declined. All three firms’ share prices plunged by about a fifth.

News of the wipeout overshadowed the fact that the other tech titans continue to do well, as also evidenced in July. Microsoft, the world’s biggest software firm, reached $100bn in annual revenue for the first time. Alphabet shrugged off the $5bn fine recently imposed on it by European trustbusters and posted strong results. Amazon announced a record quarterly profit. Den Rest des Beitrags lesen »

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Is it time to automate politicians?

Posted by hkarner - 2. August 2018

When I watch few of them it looks as if they were already automated (Strache, Kickl, …) And – unfortunately – more often Sebastian Kurz!(hfk)

Date: 01-08-2018
Source: The Economist

Robotic representation has some merits, says Alvin Carpio of The Fourth Group

A poll of British consumers conducted by software firm OpenText found that one in four Brits think robots would do a better job than humans as politicians. Years ago, The Muppet Show ran a segment mocking politicians for their stereotypical robotic behaviour. Last April a robot was nominated to run to be Tokyo’s mayor, promising fair and balanced representation.

In a world where reality is sometimes more bizarre than an episode of Black Mirror, what if we replaced our current politicians with algorithms? In a period where trust in politicians is low and government efficiency is questionable, might we be better off?

In 2017 The Fourth Group, an organisation I lead to shape technology for social good, ran a hackathon to automate politicians’ tasks. Coders, designers, politicians and policy experts gathered for two days and built new technologies. The winning team, Civic Triage, developed a chatbot to communicate with constituents. It aimed to replace weekly public meetings (known in Britain as “surgeries”) by texting people, acknowledging their concerns and pointing them to relevant local service providers. It’s not just hypothetical: Liam Byrne, a Labour Party MP, has met with other MPs to discuss using chatbots to engage with British citizens. Den Rest des Beitrags lesen »

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Bond yields reliably predict recessions. Why?

Posted by hkarner - 30. Juli 2018

Date: 27-07-2018
Source: The Economist: Free exchange

An inverted yield curve may mean a few things, none of them cheering

AS NAMES for market phenomena go, “inverted yield curve” lacks a certain punch. It is no “death cross” or “vomiting camel”. But what it lacks in panache, the inverted yield curve more than makes up for in predictive potency. Just before each of America’s most recent three recessions the yield curve for government bonds “inverted”, meaning that yields on long-term bonds fell below those on short-term bonds. Economists and stockmarkets seem unconcerned that inversion looms again (see chart). But despite generally strong economic data, there is reason to heed the warning signs flashing across bond markets.

There is nothing particularly magical about the yield curve’s predictive power. Short-term interest rates are overwhelmingly determined by changes in central banks’ overnight policy rates—for example, the federal funds rate in America, which has risen by 1.75 percentage points since December 2015. Long-term rates are less well-behaved. They reflect the average short-term rate over a bond’s lifetime, but also a “term premium”: an extra return for holding a longer-term security.

An inverted yield curve may mean a few things, none of them cheering. Markets may expect future short-term rates to be lower than present ones, presumably because the central bank has chosen to cut rates in response to economic weakness. Or markets may think they need less compensation for holding long-term bonds in the future. That might reflect expectations that inflation will fall, or that appetite will grow for the safety provided in financial storms by long-run government debt. Den Rest des Beitrags lesen »

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